Making Sense

Follow your Playbook of trades !! USDINR trade has worked beautifully. Yesterday, we did get a sideways consolidation to initiate shorts for better part of the day. The next important support is 81.75 where profits can be booked on 75% of the position.  GQG Partners on Thursday announced the completion of USD 1.87 bn secondary equity transactions in the Adani portfolio companies.  Brokerage firm Citi estimates that the increase in free float in Adani Group companies will lead to inflows b/w usd 200 – 230 mn and the possibility of a change in weightage in MSCI's May review. Services PMI at a 12 year high The S&P Global India Services PMI expanded to a 12-year high of 59.4 in in the month of February ( prior 57.2 ) showing the best improvement in new business intakes in 12 years. Input cost inflation eased to a 23-month low, while output cost inflation slowed to a 12-month low.  In the recently concluded Assembly elections in North East – Nagaland, Meghalaya and Tripura...

"The details are not the details. They make the design" RBI MPC Meeting minutes: Dr. Ashima Goyal and Prof. Jayanth R. Varma voted for no change in policy rates and favored a change of monetary policy stance to neutral while the other 4 members voted to increase the policy rate by 25 bps and maintained stance to withdrawal of accommodation. Dr. Bhide / Dr. Ranjan / Dr. Patra and the Governor expressed concerns on the sticky core inflation and maintained durable disinflation in prices is a necessary condition to necessitate a pause in hikes.  Fed Meeting minutes: The Federal Reserves also released the minutes of the monetary policy meet on Feb 1, 2023. The committee acknowledged that while significant progress had been made towards a sufficiently restrictive policy stance and inflation pressures have moderated, inflation continues to be elevated and labor markets continue to be tight contributing to wage price pressures. The consensus was for a 25 bps rate hike as a slower p...

 Let's quickly summarize the price moves in the domestic market: Asian markets echoed the risk sentiment seen overnight. Domestic equities continue to trade lower with price range in a narrow band of 17820 - 17885. RBI LAF window saw injection of 11K crore yesterday. USDINR traded heavy at the 82.60 region and by 1:30 pm IST fell to 82.29 lows while the forward curve consolidated the recent fall in premiums. The action was muted across OIS curves and G-sec curve. 1Y OIS flat at 6.8150% and 5Y paid 3 bps higher at 6.39%. Other news of interest: China's Alibaba Group sells its entire remaining 3.4% stake in Paytm MSCI said it plans to cut the weightings for 4 Adani Group companies - Adani Enterprises, Adani Total Gas, Adani Transmission and recently acquired ACC Cements. The four companies had a combined 0.4% weighting in the MSCI emerging markets index as of Jan. 30. The changes come into effect on March 1. Acc to Periscope Analytics, around $570 million is estimated to be sold ...

"What we hope ever to do with ease, we must learn first to do with diligence" Asian markets are trading higher as China resumes after week long Lunar Holidays. China re-opening alongside lower quantum of rate hikes from the US Fed has lifted the sentiment around EM currencies.  USDCNH (6.75) is now back in the consolidation range of 6.65 - 6.78 in which the currency was trapped from May until mid August 2022.  USDKRW (1228) is trading below the May 2022 lows and now finds support at 1206-1207 levels. USDTHB (32.73) is also fast approaching the Feb 2022 lows at 32.07. While KRW and THB have appreciated over 15% against the USD followed by CNH, IDR has been a relative underperformer, appreciating only 5.50% from peak to trough.  USDJPY has been facing resistance at 130.60 - 131.00 levels since 23rd Jan 2023 with market consensus leaning towards further widening of the YCC band. Today, a report by a panel of academics and business executives urged the BOJ to make its 2% infl...

 Make it a point to read the below article from Economic Times. The FPO is likely to be launched later this month and could be the tailwind for USDINR momentum lower. Adani FPO $ 2.5bn